The following story published by Moneyweb.co.za earlier this month is republished verbatim 

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Another Bobroff fee agreement found invalid

Judge Vally used the weight of the Bobroffs argument against them.

by: Tony Beamish | 9 February 2016 00:01

 

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Personal injury lawyers Ronald Bobroff & Partners (RBP) received another blow last week when the Johannesburg High Court found again that the firm’s contingency fee agreement was unlawful and made a punitive costs order against it.

Gauteng road accident victim Adrian Wong last year sued RBP, alleging that it short-paid him nearly ten years ago.  

This is the eighth judgment against RBP – considered by some 20 judges in every level of the judiciary – in under three years that found that the firm’s controversial contingency fee agreements are unlawful and that the firm has had to refund its former clients millions of rands. There are a further ten court cases in various stages of the litigation process brought by 13 former clients. 

Read Bobroff’s contingency regime unlawful and Law Society fails to act on Bobroff’s ‘suspicious transaction’

In a seminal judgment last week, Judge Basheer Vally set out the circumstances when an attorney cannot raise a defence of prescription, or that the right to claim has lapsed, to a claim brought by an aggrieved former client. The Prescription Act stipulates that a former client has three years from the time he/she has knowledge of the facts from which the debt arises to sue the attorney.

Common law contingency fee agreement

In April 2004 Wong was involved in a road accident. RBP director Darren Bobroff approached him in the Milpark Hospital where Wong signed a mandate for the firm to claim against the Road Accident Fund (RAF) on his behalf.  He understood that he would be charged 30 per cent plus VAT of whatever RBP succeeded in obtaining for him. In addition to this, Wong would be liable for the fees of the advocate retained by RBP to work on his matter, as well as the costs of the various medico-legal experts.

Contingency Fees Act

The Contingency Fees Act (CFA) and Regulations came into operation in April 1999 in order to make justice accessible to the indigent. The Act provides that lawyers may charge up to double their ordinary fee on a contingency basis.

This double-up is capped at 25 per cent (including VAT) and includes advocates fees. The agreement has to be signed before the lawyers commence working on the case.

Wong’s allegations against RBP

Wong stated in court papers that in 2007 his matter was settled the day before it was scheduled to go to court. In terms of the settlement the RAF paid RBP a capital sum of R984 056 and a contribution of R171 000 towards legal costs.

Wong alleged that after RBP paid him only 37 per cent of the capital amount, he requested a detailed accounting of the legal fees. Based on the hours that RBP actually worked on his claim, he has calculated that RBP charged him between R10 606 and R15 271 per hour. Wong asked the court to declare his fee agreement with RBP to be illegal because it failed to comply with the CFA and, furthermore, that RBP be ordered to provide him with a full account of the money it had received and paid out.

Read Wong’s court application here and here.

Has Wong’s case prescribed?

RBP put forward two preliminary defences to Wong’s claim. Darren Bobroff told the court that Wong had not demonstrated that RBP had been unjustifiably enriched by the unlawful agreement and, secondly, that his claim had prescribed or lapsed. RBP made the last payment to Wong in 2006, but he had only formally approached the Law Society of the Northern Provinces (LSNP) in 2011 with a complaint. The LSNP failed to act on his complaint.

Bobroff told the court that Wong should have known by 2011 at the latest that the firm’s fee agreement was illegal and that his right to claim from RBP was for a period of three years from then. He also told the court that it should not find in Wong’s favour because RBP had used an LSNP compliant contingency fee agreement and that RBP only had legal certainty regarding the illegality of this agreement for the very first time in February 2014 when the Constitutional Court had ruled against it in the de la Guerre matter.

Read Darren Bobroff’s affidavit here.

The judge pointed out that since the Bobroffs’ evidence was that there was no certainty concerning RBP’s fee agreement until the De la Guerre judgment in February 2014, then “Wong, a simple lay person, must be correct when he says that at that time he was not aware that the Contingency Fee Agreement was unlawful and of no force and effect.”

The court declared Wong’s agreement with RBP to be invalid. RBP was ordered to hand his attorneys a fully itemised and detailed accounting by the end of this month and immediately pay R337 000 to him pending a debate of RBP’s account. This means that Wong will have to refund RBP only if it can justify its fees.

RBP and the Bobroffs were also ordered to pay Wong’s costs on a punitive scale.

Wong’s attorney, Anthony Millar, told Moneyweb: “It is unprofessional and disgraceful when attorneys use feigned ignorance of the law in an attempt to avoid being accountable to their clients.”

In response to a request for comment, RBP’s attorney, Rael Zimerman of Taitz & Skikne told Moneyweb: “I have advised my clients to apply for leave to appeal the judgment, which will be done in due course, and they have no further comments at this stage.”

The application by Matthew and Jennifer Graham to have Ronald and Darren Bobroff suspended from the Roll of Attorneys pending an investigation into the business practices of RBP will be argued in the Pretoria High Court on March 14 , 15 and 16.

Bobroff & Son guilty of contempt of court

The following year-old story background is published verbatim from MoneyWeb.co.za to add context to the story

Earlier this week Judge Elias Matojane, sitting in the Pretoria High Court, found Gauteng father and son personal injury lawyers, Ronald and Darren Bobroff, guilty of contempt of court.

This followed an application brought by road accident victim Matthew Graham and his wife Jennifer in December 2014. In 2006 Matthew had been a passenger in a vehicle that was involved in a head-on collision when a taxi had overtaken on a solid line. He suffered serious physical and brain injuries.

The Bobroffs charged the Grahams a contingency fee amounting to 40 per cent of the monies recovered by their firm, Ronald Bobroff & Partners, from the Road Accident Fund (RAF).

Read Bobroffs’ contingency regime unlawful

Law Society dragged its heels

Ronald Bobroff, a former president of the Law Society of the Northern Provinces (LSNP), is a member of its Council. In 2011 the Grahams laid a complaint against the Bobroffs with the LSNP. It took a supine position and the Grahams hauled the Bobroffs and the LSNP to the Pretoria High Court in February last year.

In January 2011 the Grahams sought access to Matthew’s file at RBP – but their attorney only got access to the files in April 2011. Their attorney lodged a detailed complaint with the LSNP in June 2011 alleging that Jennifer Graham had unwittingly signed an unlawful 30 per cent fee agreement, that the Bobroffs failed to abide by their own illegality by thereafter charging the Grahams 40 per cent and, that the Bobroffs had fraudulently created file notes to “ramp up” the 40 per cent fee that they had unlawfully charged.

The Contingency Fees Act states that an attorney may charge double the ordinary fee or 25 per cent of the capital – whichever is the lesser.

Pretoria High Court

Advocate David Unterhalter SC, for the Grahams, told Judge Billy Mothle in the hearing of the matter early last year that it was, “suspected, upon credible evidence, that a body of file notes was brought into existence in the period 9 March to 12 April 2011 during which time RBP resisted access to Matthew’s file.”

Judge Mothle refused a request by the Grahams for the court to take over the role of the LSNP and ordered that the LSNP immediately resume its disciplinary inquiry.

Read Law Society ‘ordered’ to judge Bobroff

When Judge Mothle handed down his judgment, Ronald Bobroff told Moneyweb that he welcomed it: “RBP welcomes the vindication of it, its directors and the Law Society of the Northern Provinces, as is evident from the judgment today handed down in North Gauteng High Court.”

The Bobroffs then petitioned both the Supreme Court of Appeal and the Constitutional Court for leave to appeal against it.  Both courts rejected the Bobroffs petition out of hand.

Read Mr Bobroff, open your books

The LSNP carried out an inspection and audit late last year at RBP and prepared two audit reports.  The LSNP told Moneyweb earlier this year that it was not obliged to make either of these reports public.

Contempt of court

The Bobroffs refused to allow an inspection of RBP’s computer servers by an independent IT expert saying that the court order was impossible to comprehend. This gave rise to the contempt of court application by the Grahams.

In his judgment Judge Matojane analysed the use of the English language in court orders, saying, “The inspection of the Bobroffs computer network follows from the express language of the order. If the Bobroffs intended complying with the order they would have raised an objection … or suggested someone else to the Law Society or approached the court to seek clarification on how the order might be enforced and by what means.”

The judge found that “the inspection by an independent IT expert was intended and meant to be part of the order” handed down by Judge Mothle and that the Grahams had satisfied the court that the Bobroffs were guilty as charged.

Court order

Judge Matojane ordered the Bobroffs to “comply fully” with the relevant parts of Judge Mothle’s order, including access by the IT expert.

He also said that if the Bobroffs are unable to comply with the court order that such “disability” be attested to by both the Bobroffs on affidavit.

“Ronald and Darren Bobroff are each ordered to pay a fine of R100 000, suspended on condition that they comply within 30 days of this order.”

He also ordered that the Bobroffs pay punitive costs.

The rocky road ahead

The LSNP committee that is required, in terms of Judge Matojane’s order, to appoint the IT expert was disbanded some months ago having declared themselves to be “conflicted” on the Bobroff issue.

It is therefore not clear whether the latest court order can be implemented.

George van Niekerk, attorney for the Grahams, told Moneyweb: “The court rightly found that the Bobroffs are in contempt of its prior order. They must now be held accountable to the Law Society, the court, and, ultimately, the public. Their persistent refusals to comply with court orders on the basis of spurious, self-serving interpretations strongly suggests that they are attempting to hide incriminating records. The pervasive failure by the LSNP to act upon judicial censure of the Bobroffs’ conduct does not serve the interests of the public or the legal profession. Members of the public should be able to rely on the LSNP to force attorneys to account for their conduct. In the case of the Bobroffs, the LSNP appears to be content with the deplorable situation that former clients are forced to approach courts themselves to obtain redress, without any assistance from the Law Society. This is an indictment on the regulation of the profession, and the protection of the public, by the LSNP.”

Ronald Bobroff told Moneyweb: “Our eminent legal team [comprising Mike Hellens SC, Albert Lamey and Dawid Scholtz] will study the judgment and we will follow their advice.”

The LSNP failed to respond to Moneyweb’s request for comment having recently taken a decision not to comment on Bobroff matters.

Read the judgment here.